Croatia´s Economy Crisis

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The economy of Croatia was hit by Global Financial Crisis in 2009 and currently is in its 6th consecutive year of recession. The country has also been affected by the Eurozone crisis, since Croatia is dependent on the economy of the EU. Approximately half of Croatia’s trade is with the Eurozone, namely with Germany, Italy, Slovenia, Austria, and the Eurozone is the basis of around 75% of foreign direct investment (FDI) that flows into Croatia. Nowadays Croatia’s economy remains to be in need of foreign investment and in demand for its exports. Moreover, Croatia’s economy is exposed to Eurozone crisis through foreign banks in the country. Croatia is still struggling to exit the crisis and achieve economic growth. Furthermore, the neoliberal model of Croatia’s economy may not be leading to stabilization of the economy, but to economic depression. Between 2000 and 2007, the Croatia’s economy saw steady average growth of 4.6%. In 2008 the growth abruptly slowed down to 2.1%, in 2009 the economy contracted by 6.9% and economic growth was stagnant each year ever since. In 2010 decreasing manner was sustained and the economy contracted by 1.3%, in 2011 economy contracted by 0.2%, which may have appeared as a slight revival, but in 2012 the economy contracted by 1.9% due to the passive and stagnant recovery in the global economy. In 2013 the economy contracted by 1.0% and for the 5th consecutive year remained in recession. The European Bank of Reconstruction and Development (EBRD) stated that the growth of Croatia’s economy would not happen before 2014. During 6 years of recession Croatia has already lost 12.3% of its output. Slowly progressing in structural reforms and Croatia’s dependence on the economy of the European Union the growth...

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...abour market, which decreased their chances of re-employment. Social policy regarding poverty is to aim at preventing short-term unemployment from becoming long-term unemployment. Unsurprisingly, deteriorating public finances resulted in annual deficits and a rise in public debt. Croatia’s general government deficit reached 5% of GDP in 2012, and the overall government debt was 55.5% of GDP. In 2013 the deficit increased to 5.5% of GDP, it reflected feeble revenues, fiscal costs linked to EU accession and the debts of government enterprises. The Croatian Government predicts that the general government deficit will remain above 3% of GDP in 2013-2016; the debt-to-GDP ratio will rise to 62% in 2014 and will continue to increase in 2015-2016. Fiscal policy is now the subject to the European Union’s Excessive Deficit Procedure according to Article 126 of the EU Treaty.
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